[Kristen]

I hope like hell we don't have deflation followed by hyperinflation. Call it a hunch, but I doubt wages would hyperinflate with prices. Am I correct? Might as well stock up a xanax now, so if things get really bad, I can still be calm and happy until the end.

[Sixstrings]

$this->bbcode_second_pass_quote('Kristen', 'I') hope like hell we don't have deflation followed by hyperinflation. Call it a hunch, but I doubt wages would hyperinflate with prices. Am I correct? Might as well stock up a xanax now, so if things get really bad, I can still be calm and happy until the end.

[JJ]

don't know if this is related, but the chewing tobacco my co-worker chews went from 4.00 a package to 10.00 a package yesterday.

[patience]

Sixstrings said:
"If I remember correctly, this happened in post-Soviet Russia. The poor pensioners were really left holding the bag, too old to work and stuck with a Soviet-era pension."

Got any good ideas how to hedge that? Somehow, I think .gov wil screw up PM's as a hedge--maybe not like the 1930's, but they will find a way to keep us old farts totally screwed.

[TreeFarmer]

Even though I don't hold any, gold is a great inflation hedge. Now, it might not move exactly in sync with inflation but over the long run its value should remain fairly constant unlike paper money which, as far as I know, has only ever gone down.

TF

[Revi]

It's hard to tell when deflation turns into hyperinflation. I thought it was happening last week when silver jumped 3 bucks, but there might be lots of "deleveraging" still to come. I heard that the M3 money supply is down as well, which means that the amount of credit available is down too.

Are we looking at deflationary depression or hyperinflationary craziness? Anyone know when it's going to happen? Care to guess?

Here's a really good blog on the subject:

http://jessescrossroadscafe.blogspot.co ... ation.html

[vision-master]

$this->bbcode_second_pass_quote('JJ', 'd')on't know if this is related, but the chewing tobacco my co-worker chews went from 4.00 a package to 10.00 a package yesterday.

[Revi]

From the blog above, it sounds like hyperinflation starts when governments aren't allowed to borrow:

"As long as the government is able to generate debt, deflation is a highly unlikely outcome. And when the government reaches the practical limits of debt creation, the underpinnings of the currency give way and the economy tends to collapse in a stagflationary slump."

What does this mean for us? When we run out of places to borrow money we get hyperinflation?

[Umber]

$this->bbcode_second_pass_quote('vision-master', '')$this->bbcode_second_pass_quote('JJ', 'd')on't know if this is related, but the chewing tobacco my co-worker chews went from 4.00 a package to 10.00 a package yesterday.

[Pops]

$this->bbcode_second_pass_quote('Revi', ' ')which means that the amount of credit available is down too.

[Daniel_Plainview]

Zero Hedge: Rate Of Bank Charge Offs Surpasses That Set During Great Depression

"Even as the cataclysmic events of last year fade into memory and most pundits are convinced that the government alone can push the country into prosperity, if it only wasn't for that pesky unemployment number that just refuses to cooperate, yet another comparison with the Great Depression emerges, one that shows that the current period is in fact even worse than what occurred in the years after 1930. Moody's has released an analysis which shows that the most recent rate of bank charge offs, which hit $45 billion in the past quarter, and have now reached a total of $116 billion, is at 3.4%, which is substantially higher than the 2.25% hit in 1932, before peaking at at 3.4% rate by 1934."

"The estimated $45 billion in total charge-offs in the third quarter for rated U.S. banks compares to the $40 billion and $31 billion totals reported in second and first quarters of 2009, respectively."

continued

[mcgowanjm]

I'm going with RR Loadings, BDI, and Concrete Useage:

The Economy has shrunk by 20% since Nov 08.
Banks, according to how much the FDIC is having to eat
with each (the Avg.) Closing -40%.

40% is what the Banking System has to write down.
Immediately.

$this->bbcode_second_pass_quote('', 'L')ike a lot of other observer-interlocutors, I'd like to know what folks imagine we are recovering to. To a renewed orgy of credit-card spending? To yet another round of suburban expansion, with the boys in the yellow hard-hats driving stakes out in the sagebrush for another new thousand-unit pop-up "community?" For a next generation of super-cars built to look like medieval war wagons? That's the "hope" that our officials seem to pretend to offer. It's completely inconsistent with any reality-based trend-lines, by the way.

[mcgowanjm]

Here's another Unsung Hero:

$this->bbcode_second_pass_quote('', '
')California Budget Solution – Ignore It. $3 Billion Financial Gap by December. State Budget Deficit Already in the Billions. Tax Revenues Collapse and Unemployment and Underemployment at 23 Percent.

[Daniel_Plainview]

ZeroHedge -- Moody's Warns Of Pain Ahead For Financials Amid Record Charge-Offs

Submitted by Tyler Durden on 03/10/2010 11:57 -0500

$this->bbcode_second_pass_quote('', 'A') new report by Moody's "U.S. Bank Asset Quality: Negative Trends Slow Down, But The Pain Isn't Over" has some gloomy observations about the asset quality of the US financial system, and its implications for future charge offs and overall profitability. In estimating total loan charge-offs between 2008 and 2011 Moody's predicts that of the total $536 billion (really $633 billion if unadjusted for purchasing accounting marks), which is equal to 9.7% of all loan outstanding at December 31, 2007, only $240 billion has been charged off, leaving $296 billion still to hit the books. Yet banks have taken loan loss allowances of "only" $188 billion, leaving just over $100 billion unaccounted for. And people wonder why banks are unwilling to lend. Moody's conclusion on what happens as reality catches up with charge offs: "Although banks have provisioned for a substantial amount of their remaining charge-offs, the additional provision required will extend the period that many banks will be unprofitable well into 2010, and will reduce capital levels." Obviously, Moody's estimates do not go past 2011 when many anticipate the next major wave of loan impairments to occur in the form of Option ARM resets and Commercial Real Estate maturities. Furthermore, Moody's does not account for securitized credit card losses, which will also be an area of major pain for the banks in the upcoming years. Just how big the impact of all these will be is still to be determined although it is very likely that the overall impact will impair overall bank capital by well over $100 billion over the next several years.

[Daniel_Plainview]

Report: Charge-offs increase for many major lenders in February

$this->bbcode_second_pass_quote('', 'M')ar 16th, 2010 at 4:44pm

High charge-off rates reported by many of the nation’s big credit card lenders may reflect a bumpy road to recovery, according to a recent report by the Wall Street Journal.

Monthly filings from Bank of America Corp., Discover Financial Services and American Express Company all showed an increase in charge-offs in February, meaning that these lenders deemed a growing amount of debt uncollectible that month. Delinquency rates fell or remained flat for these companies. ... "The industry has continued to struggle with credit concerns as high unemployment pressures consumers and balance sheets," the report said.

[Sixstrings]

$this->bbcode_second_pass_quote('', 'W')ages for American workers have fallen dramatically since the financial crisis, in what will likely turn out to be the worst such plunge since the Great Depression, the Wall Street Journal reports.

When hard times hit, employers typically are reluctant to reduce wages. But this downturn has been different: More than half the workers who found new work by early 2010 after losing jobs between 2007 and 2009 said their pay had dropped, according to Labor Department data cited in the WSJ. A full 36 percent said the new job paid 20 percent less than their former one.

While headlines have focused on the national unemployment rate of 9.4 percent, the pain extends far beyond those 14.5 million who are deemed officially unemployed by government statistics. The only other instance of such severe wage reductions since the Depression was during the recession of the early 1980s, but the current slump is on track to be far worse, the WSJ notes.

Among people who are lucky enough to have work, living standards have been significantly downgraded. Almost a third of America's working families are now considered low-income, earning less than twice the official poverty threshold, according to a recent report. The recession reversed a period of improvement.

This trend spells a grim future for the American worker, and for the American economy.
http://www.huffingtonpost.com/2011/01/11/pay-cut_n_807241.html

[ian807]

Communism failed, but class warfare is alive and well.

If anyone would bother to look at the evidence instead of clinging to ideals, you see that laissez faire capitalism clearly isn't much of an answer to this. You end up Mexicanized. A few rich. Lots of poor.

Mixed systems that combine socialist and capitalist elements seem to do better. In Sweden, nobody gets too poor and with taxes, nobody gets too rich either (although there are a few Swedish billionaires.). Their society, and economy, are remarkably stable compared to ours. They also seem to know how to manage bank failures (http://www.creditwritedowns.com/2008/08/swedish-banking-crisis-response-model.html). And has anyone noticed how a socialized, unionized Germany is kicking our economic behinds?

The fact is, the USA has been purchased by the transnational wealthy, who could care less about the peasants, whether they are in China or the USA. Until the wealthy are neutralized, the USA and eventually all developed countries, will become fiefdoms in the new world order, another name for corporate feudalism.

[Plantagenet]

Here we are 20 months into the economic "recovery" and things are worse then ever. The Obama administration diddled away their first two years bailing out banks and real estate speculators, and don't seem to have a clue what to do now. The Fed's big idea is to print dollars and devalue the currency, but they were too stupid to realize that a lower US currency meant higher oil and commodity prices, putting even more of a burden on US businesses. The true unemployment rate when you include "discouraged" people who are no longer even looking for work has done nothing but go up for the last two years and is ca. 19%.

And people in DC still are doing nothing to get ready for peak oil SHEESH!